Billionaires Club: High Employee-to-Member Ratio Pays Off for Hanscom FCU

Wall Street generally applauds the idea of shedding employees, and credit unions often worry when their employee-to-member ratio climbs.

But that isn’t an issue at Hanscom Federal Credit Union, which just joined the Billionaires Club. President/CEO David Sprague points out assets per member are also high at the credit union, headquartered at Hanscom Air Force Base, Mass.

Because the credit union serves a lot of people whose paychecks come from the federal government, there has been concern about the impact of sequestration budget cuts. So even as Congress quarreled over a solution, HFCU announced that members who are federal employees and their paychecks are affected will have access to a 0% APR interest line of credit for 30 days.

Dubbed the Life Line Loan, the funds will be attached to the member’s checking accounts, providing additional money to cover checks, ATM withdrawals and debit card purchases. Hanscom FCU will also waive penalties for premature withdrawals on term share certificates held by affected members.

"Actually, members won’t be directly impacted until later in April," Sprague noted. "The federal government has to give employees 30 days notice. That went a few days into March. Most of them get paid twice a month, so given normal payroll cycles that works out to about April 20. I suspect April 15 is about when they’ll have to start not working one day a week."

The credit union has tried to be proactive, according to Sprague, because there’s a lot of anxiety. The credit union has faced this scenario before and has offered similar programs several times. Sprague believes it’s important to let members know their credit union can help them. The program will only be available for a short duration, but it gives members time to sit down with HFCU and work out a longer-term solution.

"We’ve gotten some very nice feedback from members," Sprague said.

In February 2012 the credit union launched an insurance agency selling car, homeowners and life insurance, business insurance, renters insurance, and even specialty products such as wedding and pet insurance.

The credit union had previously offered auto and homeowners insurance through CUNA Mutual. Those were successful enough that HFCU decided to expand into an area where the credit union could be more active and retain a larger portion of the commission income.

The credit union has also won recognition for its online membership application. That apply-from-wherever-you-are approach is important to HFCU.

"Our membership is very mobile," Sprague explained. "We don’t really have a lot of branches, so we constantly look at options to offer convenience in other ways, whether it’s online access, shared branching or surcharge-free ATM networks. Our members are transferred around the country and even around the world, so we want to make it easy for them to interact with us.

"Even though we’ve grown to this $1 billion range, which is gratifying, we really work very hard to continue to operate like a small credit union and provide a very high level of personal service."

He carries that idea into his own office.

"If a member does write me a letter or call me, usually the very fact I’m interested in talking to them resolves the problem. They’re often surprised I’ll pick up the phone and talk to them. We really do care," Sprague said.

For example, a member who joins online receives a series of phone calls welcoming them and making sure they are getting the full benefit of their membership. They’re alerted to what they can expect over the coming months.

Yes, he continued, the ratio of employees to members is high. But measuring assets per employee, HFCU compares very favorably with its peers. Members do more business with the credit union than most members at other credit unions, and that drives profitability.

"The more they benefit from the credit union the more we benefit. That keeps our costs down, which allows us to provide better pricing," Sprague said.

Another plus for HFCU has been that the Great Recession didn’t clobber the credit union’s military and government employees the way it hammered other sectors of the economy. Although the credit union got its start serving military personnel, it has expanded to nearly all federal employees in Massachusetts.

Even on the mortgage front there was some good news. Property values in the Northeast hadn’t soared as high as they did in some other regions and didn’t plummet as deeply as they did elsewhere. Delinquencies rose substantially, but they started out at extremely low levels.

Sprague does echo the concerns of other credit union CEOs about heavy regulatory burdens.

"The growth in regulations is obviously a big challenge," he indicated. "There’s also the low interest rate environment and the need for loans. That’s not unique to us."

As for the career path that brought him to HFCU, Sprague describes himself as a reformed banker. While attending Babson College in Wellesley, Mass., he needed a part-time job. Through the college’s part-time placement office he was hired as a collector for a division of a regional bank.

After he graduated with a major in accounting, he was offered a job as an internal auditor. He advanced through other assignments, but over the years growing pressure to provide a return for stockholders began changing the culture.

Sprague started looking around, and ended up at Rockland Federal Credit Union as it worked its way through conservatorship. Then, in December 1996, he was hired as CEO for HFCU.

As a CEO, "Probably the best decision I made is I stopped hiring people myself," he said. "The senior management staff hires any new member of the team. That team is extremely cohesive, they support one another and they enjoy working together."

Off the job he enjoys walking, reading and skiing. He quit skiing for about 25 years because, he admits, he wasn’t very good at it. Then his wife and two children – one a college graduate and the other a junior in college – persuaded him to try it again, and he discovered today’s equipment made it much easier.